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I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

just the mineral rights.
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PaulaM
Expert Alumni

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

Enter under the Rental Properties and Royalties section. You don't have to own the property and this is the section it belongs in.

Navigate to the section and answer questions regarding the property, then enter the 1099-MISC (gross amount) in the Royalty summary. 

Note: Be certain to deduct any production taxes, depletion (15%) and any other expenses you have. You will only want to pay taxes on the net amount you received, not the 1099-MISC gross. Any additional depletion that your state may allow (OK does) will be an adjustment under your state taxes.

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16 Replies
PaulaM
Expert Alumni

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

Enter under the Rental Properties and Royalties section. You don't have to own the property and this is the section it belongs in.

Navigate to the section and answer questions regarding the property, then enter the 1099-MISC (gross amount) in the Royalty summary. 

Note: Be certain to deduct any production taxes, depletion (15%) and any other expenses you have. You will only want to pay taxes on the net amount you received, not the 1099-MISC gross. Any additional depletion that your state may allow (OK does) will be an adjustment under your state taxes.

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I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

If possible, I could use a little more clarification on this process...  I understand that the information (gross, taxes paid, state tax withheld, etc.) from my 1099-Misc needs to be entered under the “Rental Properties & Royalties” mentioned above, but I am still confused with the 1099-Misc path under the “Other Common Income” section.  

 

My main question is, do I need to enter my 1099-Misc info into the “Other Common Income” section first, then proceed to complete the “Rental Properties & Royalties” Schedule C section that was auto generated?  OR... Can I just skip the 1099-Misc section under “Other Common Income” section, and just use the path under the “Rental Properties & Royalties” section instead.

 

I ask because the ”Rental Properties & Royalties” path does not ask for any information about the payer like the 1099-Misc “Other Common Income” path does.  Can you please clarify, as I have read other answers that seem to instruct other users to only follow the ”Rental Properties & Royalties”.

 

Thank you in advance!

DaveF1006
Expert Alumni

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

Yes, enter this 1099 MISC under other common income and enter all the information in the 1099 MISC exactly the way it is listed on the form.  It will eventually lead you to the Schedule E Rental and Royalty section where you would record the remaining information that is required.

 

Because of the IRS has already received a copy of your 1099 MISC from the payer, this is the only way to report it so that your 1099 MISC will match what the IRS has on file. 

 

 

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I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

I don't see Other Common Income or a Box 7 when I am entering info into the 1099-Misc section.  It appears the software is sending this info to Schedule C rather than Schedule E.  Please assist.  Thank you.  

Carl
Level 15

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

When you have a 1099-MISC, then depending on what box the income is in (box 2 in your case) it may appear in multiple locations in the program. That's perfectly fine "provided" you entered the form correctly and work it through the correct section. In your case, that's the Rental & Royalty Income (SCH E) section of the program.

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

There is no Rental properties and Royalties section. These are the two options. I do not own the property and I do not have a business.  I just inherited some royalties. Neither of the two options is correct.

 

  • Investment income from property you own – This includes natural resources extracted from your property by a third party who leases your property, as well as royalties from intellectual property that you didn't create yourself. This gets reported on Schedule E.
  • Royalty income from your business, including artist royalties or operating a natural resources business (Schedule C) – This includes income from natural resources that you extract from your property as well as royalty payments from intellectual property you created as an inventor, writer, artist, and so forth. This gets reported on Schedule C.

 

 

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

There is not Rental Properties and royalties section

LenaH
Expert Alumni

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

First, you must enter your 1099-MISC in Box 2 (assuming that is the box in which you is showing your royalty income). On the next screen, choose Investment income from property you own as the source of your 1099-MISC. Although you do not own the property, you have mineral rights and receive royalty income from the property rights you have inherited. 

 

Investment Income includes amounts received from oil, gas or mineral properties when natural resources are extracted from your property. These royalties are based on units, such as barrels, tons, etc., and are paid to you by a person or company that leases the property from you. 

 

TurboTax will then create a Schedule E on your tax return. Schedule E is the Rental and Royalties section of your return that was referred to previously. Once you enter the address of the property in which you own mineral rights, you will select Oil and Gas Income and be able to enter any expenses relevant to this income. 

 

@donnatilus

 

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POPE911
New Member

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

WHY DO I HAVT TO FILL A FORM C  WHEN I ENTER THIS INCOME?

POPE911
New Member

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

THANK YOU

JotikaT2
Expert Alumni

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

It depends.

 

Schedule C is used to report activity from a business.

 

Schedule E is used to report activity from a rental property.

 

Based upon your particular source of income, you will report the income according to what activity the income is from.

 

@POPE911

 

 

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I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

When it asks for a street address, there isn't one. It is just acreage that I have the mineral rights for. What should I do next?

JillS56
Expert Alumni

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

You do not need to enter a specific street address for Royalty Income.   TurboTax wants you to enter a description of the Royalty Income.   You could simply enter "Mineral Rights" and the location can simply be the town and state where the property is located.   

 

@cmp102

 

I am entering my 1099 misc. for royalties from mineral rights. I don't know if I need to click investment income or royalty income. I don't own the land or a business

I'm in the same boat as the OP.  After entering box 2, "Royalties" from the 1099-MISC  then the next page asks for Source of 1099-MISC Income...

 

a) Investment income from property you own

b) Royalty income from your business, including artist royalties or operation a natural resource business (Schedule C)

 

my family inherited royalties from mineral rights, and got a 1099-MISC form. So these two options don't really align with what we have, but it's a radio button selection. What would be the correct selection here?  Thank you.

 

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